A Scientist Finds Treasure Researching Oncology Drugs
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George S. Mack, The Life Sciences Report
Oncology Drugs Rack Up Gains
I love finding out how people move from point A to point B in their careers. It was an incremental process for George Zavoico who is today a senior equity analyst at New York City-based MLV & Co., a boutique investment bank focusing on the small cap space. Armed with his Ph.D. in physiology, Zavoico loves the research model, in both science and finance, and he wants to get as close as possible to the drugs and their targets inside the companies he covers. His current small company niche seems to suit his trained curiosity just perfectly. "I find that I can approach the science, the investigators and the academic researchers developing innovative drugs mainly through smaller-cap companies," he told me in a telephone conversation.
Zavoico started up his professional life as a Senior Research Scientist at Bristol-Myers Squibb Co. before migrating to management with Alexion Pharmaceuticals Inc. (NASDAQ: ALXN) and T Cell Sciences Inc. (now Celldex Therapeutics Inc.). He's also had a couple of prior stints in investment research at Westport Capital Markets and Cantor Fitzgerald. Estimating numbers can be difficult in the biotech field because so many of the smaller companies don't have revenue, much less bottom lines. Nevertheless, Zavoico garnered some praise-worth attention when he received The Financial Times/Starmine Award for being among the top-ranked Earnings Estimators in the Biotechnology Sector two years in a row.
For Zavoico, oncology is one of his key focus areas if for no other reason than the fact that there are more cancer-focused companies than any other type in biotech. The first stock he mentions is molecular analysis company Genomic Health Inc. (NASDAQ: GHDX) which is performing a multi-gene assay to determine how aggressive a breast cancer might be, which can be helpful in designing a treatment plan.
Because cancers love to surmount and skirt around various monotherapies, a more broadly focused targeting approach could be helpful, especially if it could be done with a single molecule. Zavoico likes Threshold Pharmaceuticals Inc. (NASDAQ: THLD) which is testing a prodrug that is activated in an oxygen-deprived environment, a common condition in cancerous tissue. TH-302 (precursor to bromo-isophoramide mustard) has shown quite positive results in a phase 2b proof of concept trial in pancreatic cancer. The experimental arm of the study demonstrated a 63% improvement in progression-free-survival. Threshold is up more than 600% in the last three months.
Receptor tyrosine kinases are enzymes that dwell on and in cell membranes, and they conduct signals from outside to inside so that genes inside the cell nucleus finally get the message of what's happening outside. Zavoico looks at companies developing kinase inhibitors, and he has found a twist to the typical approach. ArQule Inc. is targeting the kinase c-Met with an inhibitor that works on the allosteric site away from the active site.
He's found another interesting twist with Curis Inc., a company developing multi-targeted kinase inhibitors in combination with histone deacetylase (HDAC) inhibitors. Curis' lead product Erivedge was approved in January for basal cell carcinoma. The compound is partnered with Genentech (a unit of Roche Holding Ltd.). Zavoico believes it could be a blockbuster in the old sense of the word, approaching $1- or $2B in sales.
He talks about Agenus Inc. with its adjuvant QS-21 (saponin) which is enhancing immune response in multiple GlaxoSmithKline plc (NYSE: GSK) vaccines. Agenus is up 238% over the past three months.
Pain management is a constant headache for physicians and worse for patients. The clinician is caught between a rock and a hard place when it comes to prescribing medication for severe discomfort. If a patient is not terminally ill, the physician does not want to addict the patient. Now Zalicus Inc. (ZLCS) is developing specific ion channel blockers that could be taken orally and that could add a valuable non-opiod small molecule analgesic to the physician's bag.
Spectrum Pharmaceuticals Inc. (NASDAQ: SPPI) has created a business and scientific model based on molecules that are off-patent but that could have new life as re-purposed products. "Spectrum is one of the best companies at that," says Zavoico. One of its products, Fusilev (levoleucovorin) for metastatic colorectal cancer and osteosarcoma, saw extraordinary sales volume recently when a severe shortage of generic leucovorin necessitated the use of another product.
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